B. Riley Farber appointed court receiver of Mill Street & Co. Inc.

On May 12, 2020 by Order (the “Appointment Order”) of the Ontario Superior Court of Justice (Commercial List) (the “Court”), B. Riley Farber Inc. (“B. Riley Farber”) was appointed as receiver (the “Receiver”), pursuant to section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, without security, of all of the assets, undertakings and properties of Mill Street & Co. Inc. (the “Debtor”) acquired for, or used in relation to a business carried on by the Debtor, save and except for any interest of the Toronto-Dominion Bank in any shares, if any, that may have been pledged by the Debtor in favour of the Toronto-Dominion Bank in respect of the capital stock of All Source Security Container Holding Corporation, All Source Security Container Mfg. Corp. and 2548343 Ontario Inc.

The Appointment Order and motion materials filed in relation to this matter are available below.

Status Updates

The Receiver filed a motion to the Superior Court of Justice (Commercial List) on August 4, 2020 to be heard on August 11, 2020 for an Order approving, among other things, the following:

a) an Order substantially in the form at Tab 3 of the Motion Record:

amending the Order granted on May 12, 2020 by the Honourable Mr. Justice Hainey of the Court to remove language pertaining to the Specified Shares;
approving the First Report of the Receiver, dated August 4, 2020 (the “First Report”) and the activities of the Receiver described in the First Report;
approving the fees and disbursements of the Receiver and its legal counsel for the period up to and including June 30, 2020;
sealing the Confidential Appendices to this First Report until further Court order; and

b) such further and other relief as this Court deems appropriate.

In its First Report, the Receiver provided the Court with the following:

background information about the Debtor, the Portfolio Groups and these proceedings;
an overview of the Receiver’s activities since the Appointment Date;
an analysis of each of the Portfolio Groups and the Receiver’s recommendations for monetizing the Debtor’s shares in the Portfolio Groups; and
information regarding negotiation of the Proposed Transaction and request Court time for a hearing to approve the Proposed Transaction.

The Receiver seeks an order approving, among other things, the following:

amending the Receivership Order to remove language pertaining to the Specified Shares;
approving this First Report and the activities of the Receiver;
approving the fees and disbursements of the Receiver and its legal counsel up to and including June 30, 2020; and
sealing the Confidential Appendices to this First Report until further Court order.

The Motion Record and the First Report can be found below.

On August 11, 2020, the Honourable Justice Koehnen of the Ontario Superior Court of Justice (Commercial List) issued an Order (the “Receiver Order”) against the motion made by the Receiver approving, among other things, the following:

amending the Receivership Order to remove language pertaining to the Specified Shares (as defined in the Receivership Order);
approving the First Report of the Receiver and the activities of the Receiver as described in the First Report; and
sealing the Confidential Appendices to the First Report until further Court order.

On August 11, 2020, the Honourable Justice Koehnen of the Ontario Superior Court of Justice (Commercial List) issued an Order (the “Appeal Order”) against the motion made by 997322 Ontario Inc., 2394419 Ontario Limited, Noah Murad and Roy Murad approving, among other things, the following:

lifting the stay of proceedings set out in paragraph 9 of the Initial Order (the “Stay”) for the limited purpose of permitting Noah Murad, in his capacity as President and Chief Executive Officer of Mill Street & Co. Inc., to pursue on behalf of Mill Street the appeal of the Order of Justice Kimmel in the action styled Madison Joe v. All Source Security Container MFG. Corp. et al. and bearing court file number CV-17-588646 (the “Madison Joe Appeal”) but not in respect of any enforcement of a judgment against Mill Street;
declaring that the Receiver will have no further obligations and no liability in respect of the Madison Joe Appeal and authorizing Noah Murad, in his capacity as President and Chief Executive Officer of Mill Street, to continue the Madison Joe Appeal; and
declaring that Noah and Roy Murad will be liable for all of Mill Street’s legal costs associated with the Madison Joe Appeal, including any negative costs award.

The Receiver Order, Appeal Order and Corresponding email endorsement of Justice Koehnen dated August 11, 2020 can be found below.

On August 21, 2020, the Receiver filed a motion to the Superior Court of Justice (Commercial List) to be heard on August 28, 2020 for:

a. an order (the “Approval and Vesting Order”) to:

approve the transaction contemplated by the transfer of all of the issued and outstanding shares in the capital of GNI Management Group Inc., held and beneficially owned by 2534898 Ontario Inc. pursuant to the Share Purchase Agreement by and among, inter alia, the Seller and 2771182 Ontario Inc. and appended to the Second Report of the Receiver to be filed (the “Second Report”), and vesting in the Purchaser the Seller’s right, title and interest in and to the Transferred Shares; and
seal the unredacted SPA until further Court order.

b. an order (the “Fee and Activities Approval Order”) to:

approve the Second Report and the activities of the Receiver as described therein;
approve the fees and disbursements of the Receiver and Cassels Brock & Blackwell LLP as counsel to the Receiver for the period up to an including June 30, 2020 as set out in the affidavit of Monique Sassi sworn August 3, 2020 and the affidavit of Paul Denton sworn July 30, 2020;
approve the fees and disbursements of the Receiver and Cassels for the period from July 1, 2020 through July 31, 2020 as set out in the Affidavit of Monique Sassi sworn August 21, 2020 and the affidavit of Paul Denton sworn August 21, 2020; and
seal the unredacted Fee Affidavits until further Court order.

The Notice of Motion can be found below.

On August 25, 2020, the Receiver filed its Second Report to Court (the “Second Report”) in support of, among other things:

approval of the SPA and the Transaction and the granting of a vesting order; and
sealing the unredacted SPA until further Court order.

The Second Report of the Receiver can be found below.

On August 26, 2020 and August 31, 2020, the Receiver filed its Supplement to the Second Report (the “First Supplement”) and the Second Supplement to the Second Report (the “Second Supplement”) respectively. Both the First Supplement and the Second Supplement should be read in conjunction with the Second Report and are subject to the same qualifications set out in the Second Report.

In the First Supplement, the Receiver is considering the most tax efficient way to transfer the net proceeds from 2534898 Ontario Inc. (the “Seller”), to the Debtor in order to facilitate distributions to the stakeholders. One option is the potential amalgamation of the Seller and the Debtor in order to avoid the need to deal with an intercompany dividend.

In the Second Supplement, the Receiver is of the view that the amalgamation of the Seller and the Debtor immediately prior to closing the Transaction will minimize the adverse tax consequences associated with a significant capital gain on the sale of the shares by the Seller. By amalgamating the Seller with the Debtor, the capital gains can be offset by significant losses of the Debtor. Accordingly, subject to making sure creditors’ rights are maintained, the Receiver believes the amalgamation is in the best interests of all stakeholders and is seeking approval to implement such step in furtherance of the Transaction.

The Second Report, the First Supplement and the Second Supplement can be found below.

On August 31, 2020, the Honourable Justice McEwen of the Ontario Superior Court of Justice (Commercial List) issued the following orders:

1.Approval and Vesting Order, among other things, approving the following:

the transfer of all of the issued and outstanding shares in the capital of GNI Management Group Inc., pursuant to the Share Purchase Agreement (the “SPA”) by and among, inter alia, the Seller and 2771182 Ontario Inc. (the “Purchaser”) and the associated transactions contemplated under the form of SPA; and
all of the Seller’s right, title and interest in and to the Transferred Shares shall vest absolutely in the Purchaser, free and clear of and from any and all security interests, encumbrances, etc.; and
sealing the unredacted SPA until further Court order.

2. Fee and Activities Approval Order, among other things, approving the following:

the Second Report and the activities of the Receiver;
the fees and disbursements of the Receiver and Cassels Brock & Blackwell LLP as set out in the Fee Affidavits in the Second Report; and
sealing the unredacted Fee Affidavits until further Court order.

3. Payment Order, among other things, approving the following:

authorizing the Receiver and the current officers and/or directors of the Debtor to amalgamate with the Seller to form a single amalgamated entity; and
authorizing the payment to Canadian Imperial Bank of Commerce (“CIBC”) and Fiera Private Debt Fund VI LP (“Fiera”) an amount equal to the secured indebtedness owed to CIBC by the Seller and an amount equal to the secured indebtedness owed to Fiera by the Seller.

The Approval and Vesting Order, the Fee and Activities Approval, the Payment Order and the Endorsement of Honourable Justice McEwen can be found below.

On September 22, 2020, the Receiver filed a motion to the Superior Court of Justice (Commercial List) to be heard on September 29, 2020 for an Order (the “Distribution Order”) approving, among other things, the following:

authorizing and directing the Receiver to make the distribution to Crown Capital;
authorizing and directing the Receiver to pay the Canaccord Fee and Expense Reimbursement;
authorizing and directing the Receiver to pay the CIBC Legal Fees;
authorizing the Receiver to conduct the Lumbermen’s Sale Process;
confirming the rights of TD Bank;
approving the Third Report of the Receiver dated September 22, 2020 (the “Third Report”) and the activities, actions and conduct of the Receiver set out therein; and
sealing the Confidential Appendices in the Confidential Compendium to the Third Report until further order of the Court.

On September 22, 2020, the Receiver filed its Third Report to Court to:

provide the Court with an overview of the Receiver’s activities since the Second Report;
provide the Court with information regarding the closing of the Transaction; and
recommend that the Court issue the Distribution Order.

The motion record and the Third Report dated September 22, 2020 can be found below.

On September 29, 2020, the Honourable Madam Justice Conway of the Ontario Superior Court of Justice (Commercial List) issued an order (the “Distribution Order“) approving, among other things, the following:

authorizing and directing the Receiver to make the distribution to Crown Capital;
authorizing and directing the Receiver to pay the Canaccord Fee and Expense Reimbursement;
authorizing and directing the Receiver to pay the CIBC Legal Fees;
authorizing the Receiver to conduct the Lumbermen’s Sale Process;
confirming the rights of TD Bank;
approving the Third Report of the Receiver and the activities, actions and conduct of the Receiver set out therein; and
sealing the Confidential Appendices in the Confidential Compendium to the Third Report until further order of the Court.

The Distribution Order and Endorsement of Justice Conway can be found below.

The Receiver filed a motion to the Superior Court of Justice (Commercial List) which included its Fourth Report on November 6, 2020 to be heard on November 13, 2020 to:

Provide the Court with an overview of the Receiver’s activities since the Third Report;
Provide the Court with information regarding the Lumbermen’s Sale Process;
Recommend that the Court issue an Order (the “Approval and Vesting Order”), inter alia:
- approving the transaction (the “Lumbermen’s Transaction”) for the sale of all of the issued and outstanding shares (the “Purchased Shares”) in the capital of Lumbermen’s held and owned by the Debtor, pursuant to the stalking horse agreement dated October 20, 2020 (the “Stalking Horse Agreement”) appended hereto, by and among the Debtor as vendor and 2747524 Ontario Inc. as purchaser (the “Purchaser”); and,
- vesting in the Purchaser the Debtor’s right, title and interest in and to the Purchased Shares.
Recommend that the Court issue an Order (the “Administration Order”), inter alia:
- approving and authorizing the execution by the Receiver on behalf of the Debtor the Minutes of Settlement to be executed(the “Minutes of Settlement”) between the Receiver, the Murads (as defined below) and the Laval family (the “Lavals”) regarding the Debtor’s HVAC portfolio group (the “HVAC Portfolio Group”), as well as any other documents referenced in the Minutes of Settlement and such additional documents as may be necessary, with such minor amendments and additional actions as the Receiver may deem necessary;
- declaring that no amounts are owing by the Debtor to any of the former employees (the “Former Employees”) of the Debtor’s Fastway portfolio group (the “Fastway Portfolio Group”) pursuant to section 81.4 of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the “BIA”); and,
- approving this Fourth Report of the Receiver and the activities, actions and conduct of the Receiver set out herein;
- approving the fees and disbursements of the Receiver and Cassels Brock & Blackwell LLP (“Cassels”) as counsel to the Receiver for the period from August 1, 2020 through September 30, 2020 as set out in the affidavit of Paul Denton sworn November 2, 2020 and the affidavit of R. Shayne Kukulowicz sworn November 4, 2020 (together the “Fee Affidavits”), appended hereto as Appendices “2” and “3”; and,
- sealing the Confidential Appendices in the Confidential Compendium.

The Motion Record dated November 6, 2020 and Receiver’s Fourth Report (without appendices) are set out below.

On November 13, 2020, the Court issued the Approval and Vesting Orders in relation to HVAC Group Shares and Lumbermen’s Transaction, respectively. The two Approval and Vesting Orders and the Endorsement of Madam Justice Dietrich can be found below.

On December 10, 2020, the Receiver delivered a certificate (“Receiver’s Certificate”) confirming (i) that the conditions to the closing of the Laval Transaction as set out in the Settlement Agreement have been satisfied, or have been waived by the Receiver, the Murad Group, and the Laval Group; and (ii) the Laval Transaction has been completed to the satisfaction of the Receiver.

The Receiver filed a motion to the Superior Court of Justice (Commercial List) on December 16, 2020 to be heard on December 18, 2020 for:

1. an Order :

abridging the time for service of the Motion herein, if necessary, and validating service thereof;
approving the sale transaction (the “Crown Transaction”) contemplated by an agreement of purchase and sale with Crown Capital Private Credit Fund, LP, by its general partner Crown Capital Private Credit Management Inc. (collectively, “Crown Capital”) as purchaser (the “Purchaser”) dated December 16, 2020 (the “Crown Purchase Agreement”) and appended to the Fifth Report of the Receiver to be filed (the “Fifth Report”);
vesting the Purchased Assets in the Purchaser (or as it may direct);
directing that the Escrow Amount be released to the Receiver;
approving the Fifth Report and the activities, actions and conduct of the Receiver set out therein;
sealing the Confidential Appendices to be filed; and

2. such further and other relief as this Honourable Court may deem just.

The Fifth Report of the Receiver, the notice of the motion and the motion record can be found below.

On December 18, 2020, the Court issued an Approval and Vesting Order in relation to the Crown Transaction. The order and the endorsement can be found below.

The Receiver filed a motion to the Superior Court of Justice (Commercial List) which included its Sixth Report on December 31, 2020 to be heard on January 12, 2021:

Jacob and Noah Murad (the “Murads”) are seeking an order declaring that the Receiver is obligated to pay a purchase price adjustment (the “Purchase Price Adjustment”) under the terms of a Share Purchase Agreement dated August 31, 2020 (the “SPA”). The SPA involves the purchase of shares (the “GNI Shares”) held by 2534898 Ontario Inc. (“253” or the “Seller”) in GNI Management Group Inc. (“GNI”). The hearing is scheduled for January 12, 2021.
The SPA is between the Seller, the Debtor, the Murads and 2771182 Ontario Inc. (the “Purchaser”). The Receiver is not a party to the SPA but signed the SPA on behalf of the Debtor and its wholly owned subsidiary, the Seller (which were amalgamated immediately prior to closing the transaction).
Respective motion records are set out below for the Murads and the Receiver. The Receiver’s responding motion record includes its Sixth Report, which is also shown separately with appendices.

On January 13, 2021, Justice Koehnen issued an endorsement dismissing the motion of the Murads and restricting recovery against the Receiver for any portion of the purchase price adjustment to the $300,000 amount the Receiver is holding in escrow, and lifting the injunction of Justice Cavanagh restraining the Receiver from distributing proceeds in excess of the $300,000 escrow amount.

The endorsement can be found below.

On February 18, 2021, Justice Koehnen issued an endorsement awarding costs in favour of the receiver against Jacob and Noah Murad in the amount of $79,985.92 on a substantial indemnity scale, including HST and disbursements, and costs in favour of Crown Capital against Jacob and Noah Murad at $15,500 on a partial indemnity scale, including HST and disbursements.

The endorsement can be found below.

On March 11, 2021, the Receiver filed a motion to the Superior Court of Justice (Commercial List) to be heard on March 15, 2021 for an order, among other things, the following:

directing that the Murad Parties are precluded from taking any further enforcement actions against Lumbermens or Saleevent until further Order of the Court;
declaring that the Lumbermens Software and Data is owned by Lumbermens;
ordering that any Person (including Blue Triangle IT Solutions) in possession or control of any of the (a) Lumbermens Software and Data, (b) any access codes and PINS which are needed to access such Software and Data and (c) contracts pertaining to the Lumbermens business, shall provide same to the Receiver within 5 days of being provided with a copy of the Order;
ordering that the Murad Parties immediately cease and desist from any and all activities that (a) interfere with or harm the Lumbermens’ business and the Lumbermens Transaction (as defined in the Seventh Report), or (b) reduce the value of the Lumbermens Shares;
approving the settlements in respect of the Wineonline Litigation and the GNI Set Off Dispute; and
approving the Seventh Report of the Receiver to be filed (the “Seventh Report”) and the activities, actions and conduct of the Receiver set out therein.

The motion record and the Seventh Report of the Receiver can be found below.

On March 15, 2021, the Court issued an order (the “Adjournment Order“), among other things:

ordering that motion returnable March 15, 2021 is adjourned in accordance with the terms of this Order until May 5, 2021 (the “Hearing Date“);
ordering the Murad Parties, including, without limitation, 997 and all its assignors, are precluded from taking any further enforcement actions against any of Lumbermens and Saleevent until further Order of this Court, subject to paragraph 6 of this Order;
ordering that Blue Triangle shall provide to the Receiver any contracts pertaining to the Lumbermens business in its possession or control within five calendar days of being provided with a copy of this Order, provided however that Blue Triangle shall otherwise maintain the status quo such that no parties shall make any requests of Blue Triangle until the Hearing Date;
ordering that the Murad Parties immediately cease and desist from any and all activities that (a) interfere with or harm any of the Lumbermens business and the Crown Transaction, or (b) reduce the value of the Purchased Assets; and
ordering that that 997 be and is at liberty to issue and serve its proposed notice of application and that such application be returnable on the Hearing Date.

On March 15, 2021, the Court issued an order (the “Settlement Order“), among other things, to approve the settlement of the WineOnline Litigation and the settlement of the GNI Set-Off Dispute (both as defined in the Seventh Report).

The Adjournment Order and the Settlement Order can be found below.

On April 15, 2021, John Smith, the former chief executive officer of Lumbermens Credit Group Ltd., sworn an affidavit in further support of the motion of the receiver returnable May 5, 2021. The Receiver’s motion is for a declaration that the Lumbermen’s Data and Software is owned by Lumbermens.

The Affidavit of John Smith can be found below.

On May 5, 2021, the Court issued an order, among other things:

ordering that the time for service of this motion is hereby abridged and validated so that this motion is properly returnable today and hereby dispenses with further service thereof;
ordering and declaring that the Murad Parties, including, without limitation, 997322 Ontario Inc. and all its assignors, are precluded from taking any further enforcement actions against any of Lumbermens and Saleevent until further Order of this Court;
ordering and declaring that the Lumbermens Software and Data is owned by Lumbermens;
ordering that any Person (including, without limitation, Blue Triangle) in possession or control of any of the (a) Lumbermens Software and Data, (b) access codes and PINS which are needed to access such Lumbermens Software and Data and (c) contracts pertaining to the Lumbermens business, shall provide same to the Receiver within five calendar days of being provided with a copy of this Order;
ordering that the Murad Parties and anyone under their control ordirection shall not (a) interfere with or harm any of the Lumbermens business and the Crown
Transaction, or (b) reduce the value of the Purchased Assets, including without limitation:

(a) operate a competing company to Lumbermens, including, without limitation, any competition from the business presently known as Cylix Data for a period of two
years from the date of this order;
(b) use Lumbermens’ confidential information;
(c) remove any funds from Lumbermens’ bank accounts without the Receiver’s consent;
(d) interfere with the Receiver’s and its agents access to the Lumbermens’ accounting records, including, without limitation, QuickBooks; and
(e) interact with Lumbermens’ staff in ways that are out of the ordinary day-to-day operations of the Lumbermens’ business.

6. ordering an declaring that the Seventh Report and the activities, actions and conduct of the Receiver as set out therein be and are hereby approved.

The order can be found below.

On May 5, 2021, the Court issued an order ordering that Roy Murad, Jacob Murad, Noah Murad, and 997322 Ontario Inc. forthwith pay a total of $150,310.24 in full indemnity costs to the Receiver.

A copy of the order can be found below.

On May 3, 2022, the Receiver filed the Eighth Report of the Receiver (“Eighth Report“) and a motion to the Superior Court of Justice (Commercial List) to be heard on May 10, 2022 for an order:

authorizing and directing the Receiver to release the Escrow Funds;
ordering GoDaddy Operating Company, LLC to transition the Lumbermens domain names;
approving the activities of the Receiver as set out in the Eighth Report;
approving the fees and disbursements of the Receiver and its counsel and the Final Statement of Receipts and Disbursements;
discharging and releasing B. Riley Farber as Receiver of the undertaking, property and assets of the Debtor;
confirming Crown Capital’s continued secured claim against Mill Street for the value of its outstanding secured debt; and
confirming the continuation of the provisions of the May 5 Court Order.

Copies of the motion record and the Eighth Report can be found below.

On May 10, 2022, the Court issued an order (the “Discharge Order“) ordering, among other things, the discharge of B. Riley Farber as Receiver of the undertaking, property and assets of the Debtor.

A copy of the Discharge Order can be found below.

Effective September 21, 2022, B. Riley Farber as the Receiver is discharged as the receivership administration is complete.

A copy of the Receiver’s Discharge Certificate can be found below.

Creditor Enquiries

For creditor enquiries, please contact:

Angela Liu
Senior Associate | Restructuring
T: 437.294.4605
E: [email protected]

The case updates and court filed documents on this website are for information purposes only and you should consult your financial or legal adviser if you have any questions or concerns about your rights or obligations. Additional updates on the status of these proceedings may become available in the future.

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